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(iii)Explain what is meant by the current account multiplier in relation to a fiscal expansion, giving the appropriate equation.
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- A small open economy is described by the following equations: C = 300 + 0.8(Y - T) | = 220 - 40r NX = 300 - 60 e G = 200 T = 150 M = 1500 P = 3 r* = 5 L= Y - 60r If G increases by 30 to 230 What is the government budget deficit?If an economy has current account and budget deficits, the government should tighten fiscal policy. State whether this statement is True, False or Uncertain. Explain why using the Balance of Trade or Balance of Payments curve and use the accounting framework. What does current account refer to here exactly? What does a budget deficit mean in technical terms. Give equations for both. Also draw a diagram to illustrate necessary fiscal policy implications.Explain the key components of the below equation for open economy multipliers. How can we analyze the interaction between government expenditure and export in affecting national income/domestic output?
- How does an increase in foreign income affect domestic aggregate expenditures and demand?You know that disposable income is $18 trillion in 2020. Consumption is $13.5 trillion, investment is $4 trillion, and the government budget deficit (G-T) is $2 trillion. Calculate the size of the trade balance (in $ trillion). Note: A surplus is a positive number, a deficit is a negative number. Start with the national income identity and add taxes such that you have expressions for disposable income (Y-T) and the government budget deficit.Consider the following information about an economy. C=100+b(Y-50-0.25Y); I=50, G=50, X=10, M=5+0.1y, t=0.25Y, MPC=0.8 Find equilibrium national income Find the foreign trade multiplier What components are excluded in calculating national income and why? [ What is the effect of an increase in t of 0.3 on the equilibrium income and the multiplier?
- Assume that the foreign economy is characterized by the same equations as the domestic economy (with asterisks reversed). Use the two sets of equations to solve for the equilibrium output of each country. (Hint: Use the equations for the foreign economy to solve for Y* as a function of Y and substitute this solution for Y* in part (a).) What is the multiplier for each country now? Why is it different from the open economy multiplier in part (a)?Assume an economy where spending for each sector is: Household: C = 800 + 0.95Q Business: I = 3000 Public: G = 4000, Tr = 7000, Tx = 1000 + 0.3Q Foreign: X = 1700, Im = 200 + 0.165Q Solve for Consumption Expenditure, Household Savings, Imports https://www.bartleby.com/questions-and-answers/assume-an-economy-where-spending-for-each-sector-is-household-c-800-0.95q-business-i-3000-public-g-4/849c5d9a-4bb7-48c4-8b89-ccc576cdc909QUESTION 7 As a result of entering the world economy, Neverland experiences economic boom and its GDP goes up to y=13250: The functions that describe consumption and investment are still the same: cd () = 5000 – 1000r +0.25Y and 1d() = 500 – 1800r+0.2Y: Government spending is also the same: G=1800- What is Neverland's current account balance? Note: Type in your answer approximated to two decimal points, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard will automatically delete it and you should not do anything about it.
- Identify the correct equation from the following equations: Disposable income equals national income plus federal deficits Disposable income equals national income plus subsidies Disposable income equals national income minus financial investments Disposable income equals national income minus taxesPDFps9.pdf 2 of 3 + File | C:/Users/Wiam/Downloads/ps9.pdf Q LRAS 2) Suppose a country begins in full equilibrium in the AS-AD model at point A: P 1 W A SRAJ T * בר The country has a large agricultural sector this could be a developing country where agriculture still has substantial weight in GDP. The country relies on a large dam for much of the water supply it uses for irrigation. A serious accident damages the dam. The water flow will be substantially curtailed for years. a) Use your diagram to illustrate the effect of the accident on the economy in the long run. Make any assumptions you think are necessary. b) You are a central banker in this country. What are your concerns? Do you worry about YR? About P? If you were to adopt policies to address these concerns, is there a tradeoff in terms of dealing with these two? Illustrate with your figure. 3) Suppose that the country in the problem above the one that suffers from the dam accident is a Malthusian economy. That is, assume the…Explain the contractionary fiscal policy in the short run and long run (ignoring exchange rate and capital flows).